From BlackBerry to Qwikster: The 11 big tech debacles of 2011

Tech companies like to celebrate their successes, but where would the industry be without reflecting upon and learning from its screw-ups, as well? In that spirit, as the year draws to a close, GeekWire’s crack research team (that would be us) has mined the archives to compile a list of the 11 biggest debacles of the year in the technology industry.

Don’t worry, we’ll be making up for it later this week with a counterpoint, our list of the biggest tech triumphs of the year, including highlights from some of these same companies.

But in the meantime, we hope you enjoy wallowing in some of the low points of 2011. Let us know if you agree or disagree with our choices. If you have any other ignominious moments you’d like to remember fondly in the comments, by all means, be our guest.

March: Where’s that Windows Phone update?

Trying to pull out of its tailspin in the mobile phone market, the last thing Microsoft needed was to alienate its loyal base of early Windows Phone 7 users, but that’s what it risked doing as glitches, sluggish carrier approvals and other problems delayed the rollout of the first notable updates to the Windows Phone platform, which promised to add such basic features as copy and paste.

As Ars Technica put it at the time: “Everything that can go wrong with Windows Phone 7 update does.”

April: Amazon Web Services suffers a five-day outage

It was one of the worst outages in Amazon’s history and it was a black eye for cloud computing in general. Early on April 21, Amazon’s Elastic Compute Cloud service failed in an availability zone in its East region, knocking sites such as HootSuite, Reddit and Foursquare offline. “The sky is falling! Amazon’s cloud seems to be down (raining?) so we’re experiencing some issues too. Be back soon!,” read a tweet from mobile social gaming site SCVNGR at the time.

But some sites didn’t recover so quickly. It took a full five days for Amazon to completely restore the service, causing many to question the reliability of the online retailer’s cloud-based systems. BigDoor CEO Keith Smith noted in a guest post on GeekWire at the time that Amazon’s failure expanded beyond the technical outage to misguided communications strategy that left many companies in the dark.

“I wish we could have restored the network services faster, but these attacks were serious and sophisticated, and it simply took time to install and test the new security measures across our entire system,” said Kazuo Hirai, Sony Computer Entertainment president, in a videotaped statement.

August: HP shedding its PC business? Um, no

The world’s largest PC maker, Hewlett-Packard, shocked the industry with the news that it was looking to spin off its PC business to focus more on software and cloud services. At the same time, the company announced that it would discontinue operations for webOS devices, including the TouchPad and webOS phones, which it had acquired a little more than a year earlier through its $1 billion acquisition of Palm.

Whatever the magnitude, it was a setback for the venture, and a demonstration of the risks of our new era of commercial spaceflight.

“Not the outcome any of us wanted, but we’re signed up for this to be hard, and the Blue Origin team is doing an outstanding job,” wrote Bezos in a message on the Blue Origin site.

September: TechCrunch implosion

Arrington (Randy Stewart photo)

Disaster. Mess. Fiasco. Insert whatever adjective you’d like to describe the situation at TechCrunch, the Silicon Valley blogging empire that founder Michael Arrington proudly sold to AOL in September 2010. At the time of the news, Arrington noted in a blog post that his deep belief in the AOL management team gave him the confidence “to bet our company on them.”

Oh, how things change. A series of PR gaffes by AOL — along with a complete distrust of AOL’s Arianna Huffington — led Arrington on the war path to buy TechCrunch back. And when that effort failed, he unceremoniously left the company in September after ethical questions were raised about whether the “unpaid blogger” should both invest in and write about technology companies. (AOL is a backer of Arrington’s new CrunchFund venture capital firm, creating even more weird corporate dynamics).

Since Arrington departed TechCrunch three months ago, things have gotten worse. Several of the company’s top writers — including MG Siegler and Sarah Lacy — have left their full-time roles. And the company received another blow last week when CEO Heather Harde announced her plans to leave.

Harde’s departure uncorked Arrington on his new blog “Uncrunched” where he ripped Huffington by noting: “I’d trade 100 Arianna’s for a Heather any day.”

Good thing TechCrunch employed so many excellent writers. There’s certainly a tell-all book in the making on this one.

October: Everybody gets it wrong on the iPhone 5 (including us)

In a vivid demonstration of speculation run amuck, the world tuned in to Apple’s big iPhone 5 unveiling in October to discover … an iPhone 4S?

That’s right, no iPhone 5, and while we quickly got over our disappointment and realized that the new iPhone was a significant update in its own right, it was a good reminder to all of us not to make unfounded assumptions, no matter how many reports we hear from “people familiar with the situation.”

Apple was more victim than perpetrator in this case, but the company did its part by departing from its normal practice of releasing new iPhones during the summer. That extended period of speculation ultimately hurt iPhone sales, albeit temporarily.

October: BlackBerry outage spreads around the world

A failed switching mechanism hobbled the BlackBerry network for multiple days, leaving many of its customers unable to send or receive emails and other messages from their devices — the signature feature of the BlackBerry devices.

It was the last thing Research in Motion needed. The BlackBerry maker, an early leader in mobile messaging, has been losing ground to Apple and Google in the U.S. as the iPhone and Android devices have charged to the front of the market. RIM has also been struggling to expand beyond phones, getting a lackluster reception for its BlackBerry PlayBook tablet computer release earlier this year.

October: “Receipt-Gate” shows the dark side of social networks

After filling in behind the bar at Bimbo’s Cantino in Seattle’s Capitol Hill neighborhood, Victoria Liss posted an image of a receipt on which a customer gave her a tip of $0 along with an insult about her weight.

Then things really spun out of control, as the bartender’s Facebook friends took it upon themselves to track down the person who left the “tip.” But it turns out they found the wrong person, subjecting an unsuspecting — and innocent — guy from Texas to a barrage of insults, and leaving him to consider legal action.

October: The rise and fall of Qwikster

Qwikster lived up to its name. In the less than a month, the Netflix spin-out for DVD rentals was launched and killed. For that reason alone, it may go down as one of the quickest failures in tech history. (Even Microsoft’s Kin lasted seven weeks).

The idea was to break Netflix into two businesses, one for mail order DVD rentals (Qwikster) and one for streaming video (Netflix). But just 22 days after Netflix CEO Reed Hastings unveiled the new strategy, the company backpedaled.

“It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs,” wrote Hastings in a post. “This means no change: one website, one account, one password… in other words, no Qwikster.”

The Qwikster debacle followed a series of missteps by Netflix in which customers rebelled against price increases, with many fleeing the popular movie rental service. Netflix still hasn’t recovered, with a stock price that has lost more than 70 percent of its value in the past six months.

December: AT&T hangs up on $39 billion bid for T-Mobile

What’s worse than losing out on bid to buy one of your biggest rivals? Well, for starters, having to pay them $3 billion in cash just for the honor of having gone through the process. That’s the break-up fee that AT&T must now pay to T-Mobile USA parent Deutsche Telekom after the deal unraveled this week after months of back-and-forth.

The merger, which would have created the largest wireless company in the U.S., hit headwinds shortly after it was announced in March. Rivals like Sprint immediately took to the airwaves to denounce the merger, followed by U.S. Senator Al Franken and others who said it would ultimately hurt consumers.

In August, the U.S. Justice Department sued to block the deal. That was a sign of things to come, and things really began to unravel in November when AT&T pulled its merger application with the FCC.

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Comments

Guest

Good list. Agree with the WP update debacle. Hurt the platform badly when they needed everything to go right. And where was Andy Lees through it all? Nowhere to be seen. Would also have added the lack of any compelling MS tablet in 2011. Huge strategic mistake. Probably cemented the company’s future decline. Losing their multi-decade lead in market cap to first Apple (along with their revenue, profit, and cash lead) and then IBM should also qualify. One item missing: Yahoo. Has to make any 2011 debacle list.

Some people have been talking about the fall of MS for the past decade and longer. I guess if people keep saying it every year they will get lucky.

Also glad the the get rich schemes of wall street aren’t putting a dent in MS’s current record revenues and profit. Can’t wait for that next bubble to pop…

Guest

And from a relevance, perception, and valuation perspective they’ve been right. Profit and revenue are about to follow. Windows sales have already been effected. Office is next. Once both are negative (2012), the decline of the company overall is a mathematically certainty.

Don’t really know what you mean by get rich schemes. The companies that have been beating MS in new markets for a decade, and are disrupting its core businesses now, are primarily Apple and Google. Those are hardly ponzi schemes, particularly now that Apple actually does more revenue and profit than MS while still growing more than seven times faster. The only bubble that’s about to pop is the remaining half of MS’s market cap that Ballmer hasn’t already managed to destroy.

Guest

I firmly believe that each of these so-called “debacles” represents a teachable moment. Thank you to Microsoft, Amazon, Sony, HP, Blue Origin, TechCrunch, Apple, BlackBerry, Victoria, Netflix, and AT&T for showing us that in the long run, we can all learn from having taken a calculated risk.

Guest2

I would be willing to bet that Mr. Cook and Mr. Bishop have not contributed anything of note to society. Slamming on others’ learning experiences and calling them ‘debacles’ is certainly not a contribution.

johnhcook

Well, we do tell stories everyday here on GeekWire about innovators, entrepreneurs and people who are trying to make the world a better place through the use of technology. Not sure that makes us great contributors to society, but it’s the best we’ve got. See this example from our Startup Spotlight series today:http://www.geekwire.com/2011/startup-spotlight-deals4dreams-good

Or check out our Geeks Who Give Back editorials and photography that we are currently running:

That said, we’re not a “good news society” where we only focus on the bright and fuzzy aspects of the technology world. We’re journalists, and that requires telling the good, the bad and the ugly. How would you know to learn from these debacles if we didn’t point them out in the first place?

Anyway, sounds like you are going to be more excited about an upcoming post that we’re working on: The Top Tech Triumphs of the Year. Stay tuned for that one, and thanks for reading GeekWire.